GAO Report Critical of Delayed Dodd-Frank Implementation

In a congressional report released Wednesday, the Government Accountability Office said as of December 2012, financial regulators had issued only 48% of final rules mandated by the Dodd-Frank Act of 2010, and have missed deadlines for implementing 89% of the act’s provisions.

Regulators told the GAO the delay is due to the number, complexity and interconnectivity of Dodd-Frank’s rules.

The report cited a required ban on proprietary trading which spurred more than 750 questions for public input that produced more than 19,000 comment letters. That rule, which was supposed to have been finalized by July 2012, is expected during the first quarter of 2013.

Regulators also said in the report that they “have prioritized developing responsive, appropriate rules over meeting tight statutory deadlines.”

The report was critical of the Financial Stability Oversight Council, which was created by Dodd-Frank and counts NCUA Chairman Debbie Matz as a member. Though the report did credit the FSOC for taking some action, it also said effectiveness of the group is limited by a lack of transparency, which could lead to duplicative monitoring and analysis of system threats to the financial system.

Additionally, the report said the efficiency of the regulatory system remains unchanged since before the financial crisis, calling it a “large, fragmented structure with numerous regulators.”

Although the report suggested consolidation in overlap areas, it stopped short of suggesting a consolidation of agencies.

Other areas of risk to the financial system include the continued conservatorships of Fannie Mae and Freddie Mac, money market mutual funds and credit risk concentrations. However, despite the report’s criticisms, the GAO made no specific recommendations.